The extent of the human destruction and suffering caused by Do Kwon's fatally flawed Terra blockchain collapse and reckless selfishness is becoming increasingly clear. It is now clear that the promise of 20% returns on "stable" savings deposited into the network's Anchor Protocol enticed dozens of average citizens to get involved, with disastrous consequences.
These victims are understandably interested in plans to rebuild Terra and, one hopes, recover the value of the virtually worthless tokens they still hold. Kwon's blockchain was built around a stablecoin, UST, and a related free-floating cryptocurrency, LUNA, that would algorithmically peg the stablecoin at $1.
The troubled Luna community is now debating plans to spin off assets to a new chain and possibly redistribute the Terra team's remaining treasury assets to "small" traders based on what they held on the old chain and when.
This distribution discussion is complicated and also a complete waste of time because there should be no restoration of Terra at all.
Surely Luna Terra should be rebuilt by the team that developed this flawed network in the first place. And even more certainly, Terra should not be rebuilt with money that by rights should be returned to the people who made the mistake of trusting Kwon in the first place.
Luna owners seem to agree - over 90% of voters opposed Kwon's latest "recovery plan" (which seems to have left out most of the "plan" part).
We will (not) rise
There are many, many reasons to let Terra die.
First and foremost, Terra should not be resurrected because its stablecoin mechanism has already proven to be broken. Kwon himself has already acknowledged this. In fact, one of the only technical or strategic elements of his reboot proposal is the decoupling of UST and Luna.
But Kwon's statement Monday that "Terra is more than UST" is one of the most ridiculous and misleading statements yet made by a man known for it. Terra is nothing more than UST: the "decentralized dollar" was the main purpose and reason for the chain's existence. Everything else was window dressing.
Binance CEO Changpeng Zao agreed, calling an earlier proposal to spin off Luna and relaunch it "wishful thinking."
So removing UST from Terra will result in a chain that has no real raison d'être and no real reason to hope for any kind of price recovery or stability. Kwon's insistence that the Terra community is great and deserves redress is just a friendly way of saying, "I don't have any ideas, let's ask the public."
The second reason Terra should not be rebooted is related to the first. With trust in leadership broken and no fundamental reason for its existence, it's reasonable to assume that the project's new cryptocurrency would sell off aggressively as soon as it launches (even though the plan includes some locks).
This could give insiders another chance to market holdings that they know are essentially worthless, and dump those holdings on retailers who are still filled with a mixture of hope and despair. We have seen in recent days that low-information speculators continue to buy the worthless LUNA token, and so there is no reason to believe they would stop at a new chain.
The final reason Luna should not be reconstituted is that Kwon should not continue to have a platform within the blockchain industry. He has shown himself to be both incompetent and toxic, and there is growing evidence of explicitly fraudulent behavior. This includes not disclosing his work on a failed algorithmic stablecoin called Basis Cash and dramatically overstating UST's stability in his marketing materials.
We will learn much more about Kwon's decisions in the months and years ahead, as a wave of civil and criminal cases are now being brought against Kwon and Terraform Labs. These proceedings could also lead to the only thing that could amount to justice here: Taking the money out of the pockets of Do Kwon and his associates and giving it back to the people they so dramatically let down.